Published On: Mon, Jul 6th, 2015

Rising Plastic Prices Raises Alarm In The Plastic Industry

There has been a steady increase in the demand for the products being manufactured by the plastic industry. This increase in the demand is being seen as a good sign for the future of the industry. However, when we talk about an industry as a whole, we cannot judge its future based on just one particular feature. There are many other factors which determine the success or failure of an industry. One of the other primary factors which can affect the future of the plastic industry is plastic prices. There is unrest among the plastic manufacturers with respect to this factor.

Plastic Prices

Rising Plastic Prices

The prices of the raw materials required for the manufacture of plastic products have been on the rise in the recent past. This rise in raw material cost has been coupled by a devaluation of the Indian Rupee. Both these factors clubbed together have increased the manufacturing cost of the plastic manufacturers in India greatly. The manufacturers have not been able to pass on this increase completely to the consumers due to the fear of a drop in demand of plastic goods and hence have had to face huge financial losses. If these rising plastic prices are not curtailed soon, it can cause many plastic manufacturing units to shut down.

Affects Of Increase In The Prices Of Plastic

The recent increase in the prices of the raw materials of the plastic industry has caused great damage to the industry. Some of the common effects of this price increase have been as follows:

  • The entire financial planning of the manufacturers has gone haywire. The plastic manufacturing industry is facing a huge working capital crunch. The running of the plastic manufacturing units has got affected due to this paucity of working capital funds.
  • The lenders to the industry have started to demand an interest rate as high as 18%, while the manufacturers are demanding that the interest rates be brought down to the level of China where it is only 7%.
  • The price of polymer, which is the basic raw material for the manufacture of plastic, has gone up by 25 to 30 percent in just one quarter.

Government Action Required

The importance of the plastic industry in the Indian economy cannot be underestimated by the government. This industry alone has over 50000 manufacturing units running across the country and employees more than 4 million people through various jobs in this industry. If these units were to shut down, the unemployment rate in India would increase considerably, not to mention the impact it would have on the exports and GDP of the country. Therefore, it is important that the Government of India takes some definitive action to rescue the industry from the clutches of these rising prices. The plastic manufacturers’ association has also been demanding for a long time that the import duty on the plastic goods should also be increased significantly in order to promote the domestic consumption of their produce. It is time, the government took some action in this direction as well.